Kina Securities (KSL) H2 2024 earnings summary

Executive summary

• Achieved 13% loan book growth, driven by strong business and home lending performance and active pipeline management.

• Underlying NPAT increased 7% year-over-year to PGK 111.9m, while statutory NPAT declined 2% to PGK 102.5m due to one-off items.

• Non-interest income accounted for 55% of group revenues, reflecting successful execution of diversification strategy.

• Leadership transition underway, with Ivan Vidovich appointed CEO and Greg Pawson supporting until July 2024.

• Foreign exchange revenues surged 68% year-over-year, supported by increased customer inflows and major account onboarding.

Financial highlights

• Net interest income rose 9% year-over-year to PGK 222.2m; total revenue up 21% to PGK 488.8m.

• Cost-to-income ratio increased to 58.6% from 54.2% year-over-year, but improved to 53.3% in the second half.

• Loan book expanded 13% to PGK 2.9 billion.

• Full-year dividend per share remained unchanged at 10.0 AUD cents.

• Underlying ROE improved to 17.1% from 16.8% year-over-year.

Outlook and guidance

• Pre-tax earnings growth in 2025 expected from continued loan book expansion and non-interest revenue growth, especially digital.

• Cost efficiency improvements targeted through budget control, process improvement, and digitization.

• Post-tax earnings to benefit from a reduced tax rate: 45% in 2024, 40% in 2025, and 35% in 2026.

• PNG's real GDP projected to grow 4.9% in 2024 and 4.7% in 2025, with strong resource and non-resource sector contributions.

• FX income growth expected to moderate in 2025 after extraordinary 2024 performance.